Dividends and the Patient Investor

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It’s a curious thing, this business of investing. For those with a bit of capital, the options seem endless, a bewildering array of possibilities. And for a long time, the conventional wisdom held that if you didn’t have a substantial pot of money, you were better off chasing the flashier, more volatile stocks – the ones promising quick riches, and often delivering, well, something else entirely. The logic was that small bets required bigger swings. It always struck me as a bit like trying to steer an ocean liner with a canoe paddle. Large investors, meanwhile, could afford to be, shall we say, patient. They could sit back and let their money, as the saying goes, work for them. And often, that work involves something wonderfully unglamorous: dividends.

Dividends, you see, are essentially a share of a company’s profits, paid out to shareholders. It’s a surprisingly old concept, dating back to the Dutch East India Company in the 17th century, and it’s rather comforting to think that people have been receiving regular payouts from companies for centuries. Now, a thousand dollars yielding 5% produces a mere fifty dollars a year. Not exactly a life-altering sum. But scale that up to a million dollars, and suddenly you’re looking at fifty thousand – more than the median income in the United States. That’s a rather startling thought, isn’t it? Let’s consider two companies – Realty Income and Alpine Income – that exemplify this strategy, though it’s worth noting that the world of Real Estate Investment Trusts, or REITs, is a bit like a particularly well-organized garage sale – lots of interesting stuff, but you have to know where to look.

Realty Income

Realty Income, as the name suggests, is a REIT. Now, REITs are a bit of a tax loophole, cleverly designed to encourage investment in real estate. They avoid paying corporate income tax if they distribute a significant portion of their profits to shareholders as dividends. It’s a win-win, really, though tax codes are always more complicated than they appear. What’s particularly appealing about Realty Income is its focus on remarkably…ordinary properties. We’re not talking about skyscrapers or fancy hotels here. Think grocery stores, dollar stores, auto repair shops. The places people go to even when the economy is in the doldrums. It’s a surprisingly resilient strategy. They’ve also dabbled in data centers and casinos, which, while potentially lucrative, always strikes me as a bit like adding a roulette wheel to a church bake sale.

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The brilliance of Realty Income lies in its “triple net” leases. This essentially means that the tenant – the grocery store, for example – is responsible for property taxes, maintenance, and insurance. It’s a bit like renting a house and having the tenant pay for all the repairs. This protects Realty Income from inflation and ensures a steady stream of income. Currently, the dividend yield is around 5.26%, significantly higher than the S&P 500 average of a paltry 1.33%. And, rather helpfully, they pay out dividends monthly. It’s a small thing, perhaps, but receiving a little something each month does have a pleasing rhythm to it.

Alpine Income

Alpine Income, like Realty Income, is a REIT employing those same triple net leases. However, it’s considerably smaller – less than half the size of its larger counterpart. This isn’t necessarily a bad thing. Smaller companies can be more nimble, more willing to take risks, and, crucially, find undervalued properties. They’ve been actively acquiring properties, recently purchasing eight commercial properties for nearly forty million dollars. It’s a bit like a smaller ship being able to navigate tighter channels.

Their strategy centers around freestanding single-tenant properties leased to well-established companies like Walmart, Sam’s Club, and Lowe’s. These are the businesses that tend to weather economic storms rather well. As of late, they boast an impressive 99% occupancy rate, a testament to their focus on reliable tenants. The dividend yield is currently around 6.5%, but the real potential lies in the company’s growth as it continues to expand its portfolio. It’s a bit like planting a tree – it takes time to grow, but the rewards can be substantial.

A Word of Caution

Dividends are undeniably appealing, offering a safe and consistent return on investment. They’re particularly attractive to retirees seeking passive income. However, it’s important to remember that dividends are taxed as regular income, not capital gains. This means it’s best to hold these stocks in a tax-advantaged account, such as an IRA or 401(k). It’s a small detail, perhaps, but a savvy investor always pays attention to the details. After all, as any historian will tell you, it’s often the small things that make the biggest difference.

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2026-01-21 00:32